TSX Falls Amid Fears Of US Joining Middle East Conflict

(RTTNews) - Canadian stock market dipped on Thursday as investors traded cautiously factoring in the possibility of direct US involvement in the Middle East. The market witnessed subdued activity with the Juneteenth Holiday in the US likely keeping some traders on the sidelines.

The benchmark S&P/TSX Composite Index, today hit the day's high of 26,526.95 within a few minutes after opening below yesterday's close. Dropping again soon, it inched its way up later through the day and managed to settle at 26,506.00 down by 53.85 (or 0.20%).

Today, the Canadian Federation of Independent Business Barometer long-term index revealed that 12-month expectations among small businesses increased by 7.3 points to 47.3 in June, from 40 of May, reflecting growing optimism amongst traders.

As expected, the US Federal Reserve kept the interest rates unchanged at 4.25% to 4.50% for a fourth consecutive meeting yesterday with the Fed projecting two rate cuts later this year. In addition, the Fed's Chair Jerome Powell stated that inflation is expected to increase over the summer.

The Israel-Iran conflict that began on June 12, entered the seventh straight day today getting more severe without a retreat. Israel bombed nuclear targets in Iran while Iranian missiles hit a hospital in Israel.

When asked about the possibilities of US entering the conflict, the US President Donald Trump merely commented, "I may do it or I may not do it". Iran had warned of "serious, irreparable consequences" if US strikes Iran's territory.

Later in the day, the White House said that Trump will make a decision on US participation in the next two weeks.

Investors are concerned of serious global financial and commodity market disruptions for a prolonged period if more nations participate in the Middle East crisis.

Major sectors that lost in today's trading were Consumer Discretionary (0.42%), Materials (0.70%), and Healthcare (0.84%). Among the individual stocks, Dollarama (0.74%), Capstone Mining (3.75%), and Bausch Health Companies (2.72%) were the notable losers.

Major sectors that gained in today's trading were Energy (0.65%), Consumer Staples (0.18%), and Communication Services (0.09%). Among the individual stocks, Paramount Resources (2.67%), Empire Company (5.30%), and Rogers Communications (0.74%) were the prominent gainers.